Competition in Health Care: Reforming the Nhs (Tropical Agriculturalist)

Competition in Health Care ## The reform of the hospital service The means by which the objectives embodied in the reforms are to be achieved is the creation of a competitive market on the supply side where providers, public and private, compete for the budgets of publicly financed purchasers. The White Paper Working for Patients (Department of Health, 1989a) proposed the creation of two types of budget holders. The first type of budget holders are general practitioners working in practices of more than 11,000 patients (subsequently reduced to 9,000 patients). Such GPs can elect to become budget holders for diagnostic services and cold elective surgery. They would thus hold cash limited budgets, originally proposed to be £700,000 for a 11,000 person practice, with which they would purchase, from competing public and private providers, such items of care as X-rays, pathology tests, hernia repairs and varicose veins treatment. The second type of budget holder is the District General Manager (DGM) who is resourced to fund the care not met by general practitioners. These purchasers will hold the majority of funds now available in the hospital sector (Hospital and Community Health Services (HCHS» and will buy care from the most efficient provider, public or private and within or without the District so 'money follows the patient' to wherever the best care can be acquired most efficiently. Each of these budget holders is required to assess needs, determine the cost-effective means of meeting such needs and prioritise the pattern of health care delivery by determining how much will be spent on each service, diagnostic and therapeutic. Their budgets will be cash limited and determined, now that the RA WP formula has been abolished, by a population formula weighted by need (which could be regarded as a new RAWP formula!) but with specific preferential funding for the London regions. The budget holders will seek out providers, comparing prices and quality, and enter into contracts (known as 'agreements') with purchasers. These contracts will be for specific time periods and may take a variety of forms but they will not be enforceable at law and disputes will be resolved by 'pendulum' arbitration (which favours only one party and does not permit compromise) with appeal to the Secretary of State. Working for Patients creates a new public provider, the self-governing Hospital Trust, which will have a greater degree of freedom in the management of its affairs than 'directly managed' NHS hospitals. The proposals advocate the rigorous adoption of medical audit, including consideration of costs, to which the Presidents of the Royal Colleges have agreed with varying degrees of speed and specificity, and the creation of 100 new consultant posts annually for three years. These facets of the reforms are significant in themselves and will have considerable influence on the performance of the market in a few years if they are developed imaginatively and flexibly. Front Matter....Pages i-vii Reforming Health Care: an Introduction to the Economic Issues....Pages 1-11 Hospital Behaviour and Competition....Pages 12-47 Whither the Private Health Care Sector?....Pages 48-66 NHS Resourcing: a Financial and Economic Analysis....Pages 67-109 Information Systems and the White Paper Proposals....Pages 110-137 Managing Capital Resources in the NHS....Pages 138-177 Ethics, Clinical Freedom and the Doctors’ Role....Pages 178-191 RAWP is Dead: Long Live RAWP....Pages 192-202 The Challenge of Community Care Reform....Pages 203-215 Evaluating the Reform of the NHS....Pages 216-236 Research Implications of the NHS Review....Pages 237-252 Back Matter....Pages 253-255 A compilation of essays which focus on the changes taking place in the NHS, in particular the reforms intended to encourage competitive initiative in the provision of health care services. The text is accompanied by statistics tables and figures and notes on the contributors. Edited By A. J. Culyer, Alan Maynard And John Posnett. Includes Bibliographical References And Index.